Bill Text: MI HB6369 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Occupations; vehicles, dealers and repair facilities; dealer training; provide for. Amends sec. 248 of 1949 PA 300 (MCL 257.248) & adds sec. 248l.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-09-26 - Bill Electronically Reproduced 09/25/2018 [HB6369 Detail]

Download: Michigan-2017-HB6369-Introduced.html

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HOUSE BILL No. 6369

 

 

September 25, 2018, Introduced by Rep. Lilly and referred to the Committee on Commerce and Trade.

 

     A bill to amend 1949 PA 300, entitled

 

"Michigan vehicle code,"

 

by amending section 248 (MCL 257.248), as amended by 2016 PA 425,

 

and by adding section 248l.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 248. (1) The secretary of state shall not grant a dealer

 

license under this section until the secretary conducts an

 

investigation of the applicant's qualifications under this act,

 

except that this subsection does not apply to a license renewal.

 

The secretary of state shall conduct the investigation within 15

 

days after receiving the application and prepare a report on the

 

investigation.

 

     (2) An applicant for a new vehicle dealer or a used or

 

secondhand vehicle dealer or broker license shall include a

 

properly executed bond or a bond renewal certificate, approved by

 

the secretary of state, with the license application. If a renewal

 

certificate is used, the bond is considered renewed for each

 

succeeding year in the same amount and with the same effect as an

 

original bond. The bond shall be in the amount of $10,000.00. The

 

bond shall indemnify or reimburse a purchaser, seller, lessee,

 

financing agency, or governmental agency for monetary loss caused

 

through fraud, cheating, or misrepresentation in the conduct of the

 

vehicle business whether the fraud, cheating, or misrepresentation

 

was made by the dealer or by an employee, agent, or salesperson of

 

the dealer. The surety shall make indemnification or reimbursement

 

for a monetary loss only after a judgment based on fraud, cheating,

 

or misrepresentation is entered in a court of record against the

 

licensee or a final order that the licensee has engaged in fraud,

 

cheating, or misrepresentation is issued by the secretary of state

 

after an administrative hearing. The bond shall also indemnify or

 

reimburse the state for any sales tax deficiency as provided in the

 

general sales tax act, 1933 PA 167, MCL 205.51 to 205.78, or use

 

tax deficiency as provided in the use tax act, 1937 PA 94, MCL

 

205.91 to 205.111, for the year in which the bond is in force. The

 

surety shall make indemnification or reimbursement only after a

 

final judgment is entered in a court of record against the licensee

 

or a final order is issued by the secretary of state after an

 

administrative hearing. A dealer or applicant that provides proof

 

that is satisfactory to the secretary of state that a bond similar

to the bond required by this subsection is executed and in force is

 

exempt from the bond requirements of this subsection. The aggregate

 

liability of the surety shall not exceed the sum of the bond. The

 

surety on the bond may cancel the bond by giving notice in writing

 

to the secretary of state of the cancellation at least 30 days

 

before the effective date of the cancellation and is not liable for

 

a breach of condition occurring after the effective date of the

 

cancellation.

 

     (3) An applicant for a new vehicle dealer or a used or

 

secondhand vehicle dealer license shall apply for not less than 2

 

dealer plates under section 245 and shall include with the

 

application the proper fee for those plates under section 803.

 

     (4) As a condition precedent to the granting of a license, a

 

dealer shall file with the secretary of state an irrevocable

 

written stipulation, authenticated by the applicant, stipulating

 

and agreeing that legal process affecting the dealer, served on the

 

secretary of state or a deputy of the secretary of state, has the

 

same effect as if personally served on the dealer. This appointment

 

remains in force as long as the dealer has any outstanding

 

liability within this state.

 

     (5) A person shall not carry on or conduct the business of

 

buying, selling, brokering, leasing, negotiating a lease, or

 

dealing in 5 or more vehicles of a type required to be titled under

 

this act in a 12-month period unless the person obtains a dealer

 

license from the secretary of state authorizing the carrying on or

 

conducting of that business. A person shall not carry on or conduct

 

the business of buying, selling, brokering, leasing, negotiating a

lease, or dealing in 5 or more distressed, late model vehicles or

 

salvageable parts to 5 or more of those vehicles in a 12-month

 

period unless the person obtains a used or secondhand vehicle parts

 

dealer, an automotive recycler, or a salvage pool license from the

 

secretary of state or is an insurance company admitted to conduct

 

business in this state. A person shall not carry on or conduct the

 

business of buying 5 or more vehicles in a 12-month period to

 

process into scrap metal or store or display 5 or more vehicles in

 

a 12-month period as an agent or escrow agent of an insurance

 

company unless the person obtains a dealer license from the

 

secretary of state. A vehicle scrap metal processor that does not

 

purchase vehicles or salvageable parts from unlicensed persons is

 

not required to obtain a dealer license. A person from another

 

state shall not purchase, sell, or otherwise deal in distressed,

 

late model vehicles or salvageable parts unless the person obtains

 

a foreign salvage vehicle dealer license from the secretary of

 

state under section 248b. A person, including a dealer, shall not

 

purchase or acquire a distressed, late model vehicle or a

 

salvageable part through a salvage pool, auction, or broker without

 

a license as a salvage vehicle agent. The secretary of state shall

 

investigate and seek prosecution, if necessary, of persons

 

allegedly conducting a business without a license.

 

     (6) The application for a dealer license shall be in the form

 

prescribed by the secretary of state and shall be signed by the

 

applicant. In addition to other information as may be required by

 

the secretary of state, the application shall include all of the

 

following:

     (a) The name of the applicant.

 

     (b) The location of the applicant's established place of

 

business in this state, together with written verification from the

 

appropriate governing or zoning authority that the established

 

place of business meets all applicable municipal and zoning

 

requirements.

 

     (c) The name under which the dealer will conduct business.

 

     (d) If the business is a corporation, the state of

 

incorporation.

 

     (e) If the business is a sole proprietorship or partnership,

 

the name, address, and date of birth of each owner or partner; if

 

the business is a corporation, the name, address, and date of birth

 

of each of the principal officers.

 

     (f) The county in which the applicant will conduct business

 

and the address of each place of business in that county.

 

     (g) If the dealer's business is the sale of new vehicles, the

 

make or makes of those vehicles. Each new vehicle dealer shall send

 

with the application for license a certification that the dealer

 

holds a bona fide contract to act as factory representative,

 

factory distributor, or distributor representative to sell at

 

retail ......... (the make of vehicle to be sold) and that the

 

contract meets the requirements for a dealer agreement under 1981

 

PA 118, MCL 445.1561 to 445.1583.

 

     (h) A statement of the previous history, record, and

 

associations of the applicant and of each owner, partner, officer,

 

or director of the applicant. The statement shall be sufficient to

 

establish to the satisfaction of the secretary of state the

business reputation and character of the applicant.

 

     (i) A statement showing whether the applicant has previously

 

applied for a license, the result of the application, and whether

 

the applicant has ever been the holder of a dealer license that was

 

revoked or suspended.

 

     (j) If the applicant is a corporation or partnership, a

 

statement showing whether a partner, employee, officer, or director

 

has been refused a license or has been the holder of a license that

 

was revoked or suspended.

 

     (k) If the application is for a used or secondhand vehicle

 

parts dealer or an automotive recycler, all of the following:

 

     (i) Evidence that the applicant maintains or will maintain an

 

established place of business.

 

     (ii) Evidence that the applicant maintains or will maintain a

 

police book and vehicle parts purchase and sales and lease records

 

as required under this act.

 

     (iii) Evidence of worker's compensation insurance coverage for

 

employees classified under the North American industry

 

classification system number 42114, entitled "motor vehicle parts

 

(used) merchant wholesalers" or under the National Council on

 

Compensation Insurance classification code number 3821, entitled

 

"automobile dismantling", if applicable.

 

     (l) A certification that neither the applicant nor another

 

person named on the application is acting as the alter ego of any

 

other person or persons in seeking the license. For the purpose of

 

this subdivision, "alter ego" means a person that acts for and on

 

behalf of, or in the place of, another person for purposes of

obtaining a vehicle dealer license.

 

     (m) A certification that the applicant if the applicant is an

 

individual or sole proprietorship, the partners of the applicant if

 

the applicant is a partnership, the principal officers of the

 

applicant if the applicant is a corporation, or any other

 

individual who is responsible for the daily operations of the

 

dealership, as applicable, has reviewed and understands the

 

requirements of this act, the rules promulgated under this act, the

 

dealer manual published by the secretary of state, and any other

 

applicable material provided by the department.

 

     (n) For an application submitted by or on behalf of an

 

eligible used vehicle dealer for an original license, a

 

certification that within the 6-month period preceding the date of

 

the application, the applicant, the partners of the applicant, or

 

the principal officers of the applicant, as applicable, completed

 

the dealer training program described in section 248l(2). This

 

subdivision does not apply to an application to renew the license

 

of an eligible used vehicle dealer and does not apply to any

 

original license that was granted to an eligible used vehicle

 

dealer before, and that is valid on, the effective date of section

 

248l. As used in this subdivision and subdivision (o), "eligible

 

used vehicle dealer" means that term as defined in section 248l.

 

     (o) For an application submitted by or on behalf of an

 

eligible used vehicle dealer for an original or renewal license, a

 

certification that each retail sales location of that dealer has an

 

employee that has completed the dealer training program required

 

under section 248l(3) or (5), as applicable.

     (7) A person shall apply separately for a dealer license for

 

each county in which business is to be conducted. Before moving 1

 

or more places of business or opening an additional place of

 

business, a dealer shall apply to the secretary of state for and

 

obtain a supplemental dealer license. The secretary of state shall

 

not charge a fee for a supplemental dealer license and shall issue

 

a supplemental dealer license only for a location, including a

 

tent, temporary stand, or any temporary quarters, that does not

 

meet the definition of an established place of business, within the

 

county in which the dealer's established place of business is

 

located. A dealer license entitles the dealer to conduct the

 

business of buying, selling, leasing, and dealing in vehicles or

 

salvageable parts in the county covered by the license. The dealer

 

license shall also entitle the dealer to conduct at any other

 

licensed dealer's established place of business in this state only

 

the business of buying, selling, leasing, or dealing in vehicles at

 

wholesale.

 

     (8) The secretary of state shall classify and differentiate

 

vehicle dealers according to the type of activity they perform. A

 

dealer shall not engage in activities of a particular

 

classification as provided in this act unless the dealer is

 

licensed in that classification. An applicant may apply for a

 

dealer license in 1 or more of the following classifications:

 

     (a) New vehicle dealer.

 

     (b) Used or secondhand vehicle dealer. A used or secondhand

 

vehicle dealer may be eligible for a mobility dealer endorsement

 

under section 248k.

     (c) Used or secondhand vehicle parts dealer.

 

     (d) Vehicle scrap metal processor.

 

     (e) Vehicle salvage pool operator.

 

     (f) Distressed vehicle transporter.

 

     (g) Broker.

 

     (h) Foreign salvage vehicle dealer.

 

     (i) Automotive recycler.

 

     (j) Beginning April 1, 2005, wholesaler.

 

     (9) All of the following apply to the issuance, renewal, and

 

expiration of a dealer license under this section:

 

     (a) A dealer license that is issued before the effective date

 

of the amendatory act that added section 248k expires on December

 

31 of the last year for which the license is issued.valid.

 

     (b) A dealer shall renew its dealer license annually. The

 

secretary of state may renew a dealer license for a period of not

 

more than 4 years if the secretary receives a renewal application

 

and payment of the fee required under section 807.

 

     (c) An initial dealer license issued on or after the effective

 

date of the amendatory act that added this subdivision expires 1

 

year after the date the license is issued.

 

     (c) (d) To renew a dealer license, the dealer shall file an

 

application for renewal with the secretary of state at least 30

 

days before the expiration of its current license.

 

     (d) (e) If a dealer has not renewed its dealer license on or

 

before the expiration date of its current license, the secretary of

 

state within 10 business days after that expiration date must

 

notify the dealer that the secretary of state has not received its

renewal application. The notice shall include the amount of the

 

late renewal fee.

 

     (e) (f) A dealer may continue to operate its dealer business

 

after the expiration of its dealer license, pending approval of the

 

renewal application, if the renewal application is delivered in

 

person or mailed to the secretary of state on or before the

 

expiration date of the license. If requested by the department, a

 

dealer that mails an application under this subdivision must

 

provide proof of mailing of the renewal application that is

 

satisfactory to the department.

 

     (f) (g) If an application to renew a dealer license is filed

 

with the secretary of state after the expiration of that license,

 

the dealer may operate its dealer business beginning on the date on

 

which the application is delivered or mailed to the secretary of

 

state, pending approval of the renewal application. If requested by

 

the department, a dealer that mails an application under this

 

subdivision must provide proof of mailing of the renewal

 

application that is satisfactory to the department. A dealer shall

 

pay a renewal fee equal to 150% of the normal renewal fee for a

 

renewal described in this subdivision.

 

     (g) (h) If a dealer files an application to renew a dealer

 

license more than 30 days after the expiration of that license, the

 

dealer is considered a new applicant for a dealer license under

 

this section.

 

     (h) (i) The secretary of state shall deposit the late renewal

 

fees collected under subdivisions (e) (d) and (g) (f) in the

 

transportation administration collection fund created in section

810b.

 

     (10) A dealer may conduct the business of buying, selling, or

 

dealing in motor homes, trailer coaches, trailers, or pickup

 

campers at a recreational vehicle show conducted at a location in

 

this state without obtaining a separate or supplemental license

 

under subsection (7) if all of the following apply:

 

     (a) The dealer is licensed as a new vehicle dealer or used or

 

secondhand vehicle dealer.

 

     (b) The duration of the recreational vehicle show is not more

 

than 14 days.

 

     (c) Not less than 14 days before the beginning date of the

 

recreational vehicle show, the show producer notifies the secretary

 

of state, in a manner and form prescribed by the secretary of

 

state, that the recreational vehicle show is scheduled, the

 

location, dates, and times of the recreational vehicle show, and

 

the name, address, and dealer license number of each dealer

 

participating in the recreational vehicle show.

 

     Sec. 248l. (1) The secretary of state shall establish each of

 

the following dealer training programs for eligible used vehicle

 

dealers:

 

     (a) A prelicensure dealer training program that meets all of

 

the following:

 

     (i) Is conducted by the department, or a qualified trade

 

organization approved by the department, and is offered at least 2

 

times each calendar quarter. If approved by the department, the

 

training program may be conducted online or by other electronic

 

means.

     (ii) Is available to any individual who is an eligible used

 

vehicle dealer who is applying for an original dealer license or is

 

a partner or officer of an eligible used vehicle dealer that is

 

applying for an origianl dealer license.

 

     (iii) Includes training related to this act and any other

 

subject matter approved by the secretary of state, such as consumer

 

protection and sales and use tax collection. The department may

 

consult with any other departments to evaluate and approve course

 

content it considers appropriate.

 

     (b) A training program for designated individuals that meets

 

all of the following:

 

     (i) Is conducted by the department or another person

 

designated by the secretary of state and is offered at least 2

 

times each calendar quarter. If approved by the department, the

 

training program may be conducted online or by other electronic

 

means.

 

     (ii) Is available to any designated individual.

 

     (iii) Includes training in transferring vehicle titles,

 

documentation of title transfers, record keeping, and any other

 

subject matter approved by the secretary of state, such as consumer

 

protection and sales and use tax collection.

 

     (c) A continuing education training program that meets all of

 

the following:

 

     (i) Is conducted at least 2 times in each calendar quarter.

 

     (ii) Includes at least 2 hours of training.

 

     (iii) Includes subject matter approved by the secretary of

 

state such as transferring vehicle titles, documentation of title

transfers, record keeping, consumer protection, and sales and use

 

tax collection. The department may consult with any other

 

departments it considers appropriate to evaluate and approve course

 

content.

 

     (iv) Is conducted by 1 of the following:

 

     (A) The department.

 

     (B) A qualified trade organization that is approved by the

 

department. The department may evaluate a qualified trade

 

organization approved under this sub-subparagraph to determine

 

whether it meets the requirements of this subdivision. The

 

department may, after a hearing, suspend or revoke a qualified

 

trade organization's approval to offer the training described in

 

this subdivision for failure to comply with those requirements.

 

     (2) In the 6-month period preceding the date of the

 

application for an original eligible used vehicle dealer license,

 

each individual who is the applicant, each partner of the

 

applicant, or each officer of the applicant, as applicable, for the

 

original eligible used vehicle dealer license must complete the

 

dealer training program described in subsection (1)(a). This

 

subsection does not apply to either of the following:

 

     (a) An applicant or application for the renewal of an eligible

 

used vehicle dealer license.

 

     (b) The holder of an original eligible used vehicle dealer

 

license that was granted before, and is valid on, the effective

 

date of this section.

 

     (3) In the 90-day period following the issuance of an original

 

dealer license to an eligible used vehicle dealer, the licensed

dealer shall select a designated individual and ensure that he or

 

she completes the dealer training program described in subsection

 

(1)(b). However, this subsection does not apply if the designated

 

individual has completed the training program described in

 

subsection (1)(c). An eligible used vehicle dealer must select a

 

designated individual for each of its retail sales locations. An

 

eligible used vehicle dealer must not select the same individual as

 

the designated individual for more than 1 retail sales location.

 

     (4) Subsection (3) does not apply to the holder of an original

 

or renewal eligible used vehicle dealer license that was granted

 

before, and is valid on, the effective date of this section until

 

that license is next renewed.

 

     (5) In addition to the training program described in

 

subsection (1)(b), an eligible used vehicle dealer shall ensure

 

that a designated individual completes the training program

 

described in subsection (1)(c) 1 time in each 12-month period after

 

the date of issuance of its original license.

 

     (6) The department shall not renew the license of an eligible

 

used vehicle dealer unless the application for renewal includes a

 

certification from the dealer that it is in compliance with the

 

training requirements applicable under this section.

 

     (7) As used in this section:

 

     (a) "Designated individual" means any of the following

 

individuals, if he or she is selected by an eligible used vehicle

 

dealer to complete a training program described in this section:

 

     (i) An individual who is a licensed eligible used vehicle

 

dealer or a partner or officer of a licensed eligible used vehicle

dealer.

 

     (ii) Is an employee of a licensed eligible used vehicle

 

dealer, such as a general manager, a sales manager, or an employee

 

who is responsible for preparing title documents for the dealer.

 

     (b) "Eligible used vehicle dealer" means a person that is

 

licensed as a used or secondhand vehicle dealer, or is applying for

 

licensure as a used or secondhand vehicle dealer, and is not

 

licensed or seeking licensure as a new vehicle dealer.

 

     (c) "Qualified trade organization" means a bona fide nonprofit

 

membership organization that is based in this state, that has been

 

in existence for at least 5 years, and whose members are primarily

 

eligible used vehicle dealers.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.